High costs and low vacancy rates reiterated by national housing report
|Published: 06-21-2023 5:22 PM
The New Hampshire housing shortage is squeezing businesses trying to recruit workers, taxing families looking to find an affordable place to live, and has become a focal point for state politicians trying to chip away at a solution.
The statistics are clear – rent is expensive and housing choices are limited. And now, by 2030 the state has a daunting task at hand – to build 60,000 new units.
While the Granite State is especially burdened by this crunch, it isn't alone. Nationwide, rent continues to increase while home sales and construction decline. And for both homeowners and renters, the cost of housing is a consistent burden.
Simply put, millions of Americans are now priced out of homeownership, according to the State of the Nation’s Housing report from Harvard’s Joint Center for Housing Studies.
While the housing market cooled early this year, compared to historically high pandemic prices, the cost of homeownership is still out of reach for many Americans.
Prior to the pandemic, the median home sale price sat at $283,000. In March 2023, this number rose by almost $100,000, to $375,400.
With up-front and down-payment costs needed to secure a mortgage, this means that new homeowners are required to save more to even enter the market.
This pressure is evident in the decline of first-time homeowners, according to the Harvard report.
After the annual interest rate on a 30-year-fixed-rate mortgage jumped to 6.9 percent in 2022, the median monthly payment for mortgages, taxes and insurance hit $3,100 in October.
At the beginning of 2022, that cost was $2,200.
And as a result, there was an annual decline of 22 percent for mortgages issued to first-time homebuyers.
There’s also a scarcity when it comes to the number of active listings, both nationwide and in New Hampshire.
In March 2023, just over 2,300 houses were listed in the state. That number is 62 percent lower than listings pre-pandemic, in 2019.
This is a stark decline compared to nationwide numbers. Across the country, there were 42 percent fewer listings than 2019.
It’s harder to find sales across the country, but in New Hampshire, options are more limited for interested buyers.
High rent and low vacancy rates means that not only are apartments hard to come by, but when available, a hefty price tag can accompany the empty unit.
It’s a nationwide trend that is felt by most New Hampshire tenants.
While there was a rental vacancy rate of 6.4 percent across the country in the first quarter of 2023, that number has remained below 1 percent in New Hampshire over the last two years.
In 2022, it fell to 0.5 percent for all units state-wide. The last time the state’s vacancy rate was at 5 percent, which is considered healthy for supply to meet demand, was in 2009, according to the New Hampshire Housing Authority.
For renters who are able to find a vacant unit, rental costs continue to surpass pre-pandemic rates. From the end of 2020 through 2021, rent increased by 15 percent according to Harvard’s data.
In New Hampshire, an annual income of $63,000 is needed to afford the median cost of a two-bedroom unit with utilities, according to the New Hampshire Housing Authority, with median rent for this two-bedroom just over $1,500, which is a 5.7 increase from 2021.
This means that for many renters, both in state and nationwide, the cost of housing is a monthly burden.
Cost-burden renters are defined as people who spend more than 30 percent of their income on housing. Between 2019 and 2021, the number of cost-burdened renters increased by 1.2 million.
This increase meant that 49 percent of households that rent are cost-burdened, which narrowly misses the most recent peak in 2011 at 51 percent, following the Great Recession.
New numbers in New Hampshire illustrate the state's housing shortage. By 2030 60,000 units are needed to meet demand. By 2040, the need grows to 90,000.
In order to meet these projections, it’s clear there needs to be a surge in construction. But with high material and land costs and complex zoning clauses in most municipalities, that is easier said than done.
Nationwide, the number of single-family home construction dropped by 10 percent, according to the State of the Nation’s Housing. 2021 marked the highest level in 15 years.
In New Hampshire, there was a slight decrease in the number of building permits issued for single-family homes from 2020 to 2021.
But across the country, permits for multi-family homes continue to rise. From 2021 to 2022, multifamily construction increased by 15.5 percent, according to Harvard.
Now, the number of multifamily homes underway is at it’s highest level since 1986.
In New Hampshire, multi-family development is aided by state grants like the InvestNH program, which has supported the construction of 1,470 units that are expected to be completed by 2024.